Illegal tax schemes lead to government lawsuit against New York lawyer

A New York lawyer is getting sued by the U.S. Attorney’s office in response to allegations of multiple illegal tax schemes.

The government claims Harold Levine “promoted abusive tax shelters while serving as a partner and head of the tax practice group [at] … Herrick Feinstein.”

Now, chair of the tax practice group at Moritt Hock & Hamroff, Levine allegedly “promoted, implemented and/or participated in at least 90 unlawful tax schemes designed to cheat the Government out of hundreds of millions of dollars in tax liability,” according to a statement released by Preet Bharara, U.S. Attorney for the Southern District of New York.

Prosecutors further claim Levine used companies, which had “phony losses on their books to shield millions of dollars of income garnered by other companies.” In addition, he allegedly approved a false tax opinion letter, news reports said.

“Those who promote illegal tax avoidance schemes are not simply committing a fraud on the United States Government,” Bharara said in a statement. “They are taking advantage of the hard-working, honest Americans who pay their share in taxes when the bill comes due. This Office will not tolerate those who unlawfully seek to game the system in order to evade their tax obligations.”

For his role in the schemes, Levine received more than $5 million in fees. The government wants to bar Levine from organizing, promoting or selling tax shelters that use an intermediary-type transaction or state tax credits designed to reduce or eliminate tax liabilities. He could be subject to penalties, too.

The tax loss from the schemes exceeds $129 million, not including penalties and interest. It appears to be uncollectible because there are no assets left in the tax-avoiding corporations.

In a statement reported by Reuters, Herrick Feinstein called Levine a "rogue partner who concealed his activities from all other Herrick lawyers." The firm claimed it forced Levine to resign in 2012, and has been cooperating with the Internal Revenue Service (IRS).

“Every one of the alleged incidents cited in the lawsuit occurred before Mr. Levine joined Moritt Hock,” that law firm said in a statement e-mailed to Bloomberg News. “Although any charges like these are concerning, we firmly believe in Mr. Levine and our legal system.”

Levine has over 25 years of experience in tax law. Among his specialties are tax planning as it applies to real estate, corporate and securities transactions. He also has been counsel to a public company. In addition, he has structured a private equity fund, comprised of mostly tax-exempt investors, to minimize unrelated business taxable income, Moritt Hock said on its website.